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December 18, 2007

Here are the Web's best new links about compliance and cost aspects of plan operation, design and policy.


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(a) New Guidance Documents

(None today.)

(b) News

States Face $2.73 Trillion Bill for Retirees, According to Study
Excerpt: "While states have saved about $2 trillion to meet these obligations, their promises to retirees are still underfunded by about $731 billion, the study showed. The study, which evaluated all 50 states, also found wide variations among state practices, with only a third of states consistently setting aside the amount their actuaries tell them is necessary to cover the cost of long-term benefits." (Reuters via The New York Times; free registration required)

California Health Reform Passes First Vote
Excerpt: "California's Assembly on Monday approved Gov. Arnold Schwarzenegger's plan for universal health insurance, as overhauling health care grows as a prominent issue in the 2008 presidential election." (Reuters via Yahoo! News)

California Moves Closer to Expanding Health Care
Excerpt: "California moved significantly closer to enacting a broad expansion of health insurance coverage on Monday when the Democratic-controlled Assembly passed legislation that has the backing of the Republican governor, Arnold Schwarzenegger." (The New York Times; free registration required)

California Governor, Nuñez Forge a Health Plan
Excerpt: "After nearly a year of often tortuous negotiations, Gov. Arnold Schwarzenegger and Assembly Speaker Fabian Nuñez have settled on a plan to extend health insurance to 3.6 million Californians who lack it through a new tax on all employers and tobacco sales, officials said Friday." (Los Angeles Times)

Massachusetts Panel Approves Changes to Subsidized Residents Health Plan
Excerpt: "Striving to hold down costs to taxpayers, a state panel . . . approved a range of changes for next year for the rapidly growing subsidized health insurance program. The changes will probably cut payments to doctors and hospitals, reduce choices for patients, and possibly increase how much patients have to pay." (The Boston Globe)

(c) Summaries of Guidance; Filed Comments

Overview: CMS Final Rule for Medicare Advantage and Medicare Part D
Excerpt: "After much anticipation, the Centers for Medicare and Medicaid Services (CMS) published its final rule with comment period (Final Rule) addressing contracting requirements for both the Medicare Advantage and Medicare Prescription Drug Benefit Programs (Programs). The Final Rule not only affects Medicare Advantage Organizations and Part D Plan Sponsors (Plans), but also likely will affect providers' compliance programs and providers' contractual relationships with Plans." (McDermott Will & Emery)

Overview: San Francisco's Health Care Security Ordinance Takes Effect in 2008
Excerpt: "Hard on the heels of San Francisco's paid sick leave law (Proposition F), which became effective February 5, 2007, employers will face another challenge in 2008, when employer health care spending mandates found in the San Francisco Health Care Security Ordinance ('HCSO') go into effect - unless the courts intervene. A decision in a year-old lawsuit by a restaurant employers' association to block the ordinance on ERISA preemption grounds is expected before the end of 2007." (Littler Mendelson P.C.)

Overview: HIPAA Safe Harbor for Supplemental Health Insurance
Excerpt: "Employers who sponsor supplemental health insurance plans should review the plan procedures to ensure that the policies either meet the safe harbor or the HIPAA portability provisions. If the plan does not meet either, then the employer should determine whether it prefers to satisfy the safe harbor or the HIPAA provisions and immediately take action to do so." (Littler Mendelson PC)

Overview: IRS Expansion of Medical Expense Deductions
Excerpt: "Medical care is defined as amounts paid for the diagnosis, cure, mitigation, treatment, prevention of disease or that affects a structure or function of the body. Treasury Regulations explain that medical care includes x-rays, labs and other diagnostic procedures. Revenue Ruling 2007-72 addresses three specific types of diagnostic procedures; an annual physical examination by a physician, a full-body electronic scan by a clinic technician and the purchase of a pregnancy test kit." (Littler Mendelson PC)

Overview: New Hampshire Civil Unions Statute Taking Effect in 2008
Excerpt: "NH civil unions will only be recognized if they are between couples of the same sex. The parties must be at least 18 and cannot be close relatives (a bit more strict than the state's heterose.xual marriage law, which permits girls of 13 and boys of 14 to marry with parental consent, and allows grandparents to marry grandchildren). A licensing process is required through NH Town Clerks." (theworkplace.biz)

Employer's Gross Misconduct Defense Fails, but Court Severely Limits Employee's Recovery
Excerpt: "EBIA Comment: An employer takes a big risk when it denies COBRA due to gross misconduct. Being wrong about gross misconduct can lead not only to penalties, as it did in this case, it might also result in an award of retroactive COBRA coverage and attorney's fees. Accordingly, gross misconduct COBRA denials should be reserved for flagrant conduct that clearly constitutes a substantial and willful disregard of the employer's interests. As this case demonstrates, however, notifying qualified beneficiaries of the denial may greatly reduce any award if a court later disagrees with the gross misconduct conclusion." (Employee Benefits Institute of America)

Overview: DOL Announces Enforcement Safe Harbor for Supplemental Plans Under HIPAA Portability, MHPA, WHCRA, and NMHPA Rules
Excerpt: "EBIA Comment: This guidance was prompted, according to the DOL, by concerns on the part of the three federal agencies enforcing the HIPAA portability rules (the DOL, IRS, and HHS) that certain insurance products being marketed as excepted supplemental coverage do not actually qualify as such. Of the FAB's four criteria, only the second one is specifically found in the HIPAA regulations. The other three reflect the DOL's interpretation of the language of ERISA and the regulations requiring that the policy be both supplemental in nature and similar to Medicare or Tricare supplements." (Employee Benefits Institute of America)

Amounts Paid for Diagnostic Procedures and Devices Can Be Medical Care Expenses Even Without Symptoms of Illness
Excerpt: "This IRS revenue ruling explains that amounts paid for certain diagnostic procedures and devices are medical care expenses under Code Section 213(d), even when incurred by an individual without symptoms of illness. The ruling analyzes three expenses: (1) an annual physical exam (including a doctor's services and lab tests); (2) a full-body electronic scan, obtained without a doctor's recommendation, that examines the internal organs to identify disease or other abnormalities and serves 'no non-medical function;' and (3) a pregnancy test kit. The individual who incurred each expense had no symptoms of illness." (Employee Benefits Institute of America)

(d) Trends, Surveys, Research

Health Plan Quality Data Going Unused
Excerpt: "In a study published recently in the Journal of the American Medical Association, researchers from the Harvard School of Public Health found that almost two-thirds (65 percent) of 609 major employers surveyed look at health plan quality data when choosing a plan, but only about three in 20 (17 percent) use that information to determine bonuses or penalties in their health-plan contracts." (Human Resource Executive Online; free registration required)

Rising Costs Jeopardize Health Insurance for Many, According to Survey
Excerpt: "After pay, health care insurance is the most important inducement small businesses use to recruit and keep workers, according to a new survey. Yet due to rising costs, almost 10% said they could dump their health coverage next year or are unsure about it, reports the National Association of Professional Employer Organizations, Alexandria, Va., which conducted the survey." (The National Underwriter Company; free registration or paid subscription required)

A Constantly Consolidating Health Care Market Does Not Have to Be a Bad Thing
Excerpt: "Mark Campbell, president and CEO of Innoviant, Inc., talked to EBA about what UnitedHealthcare's acquisition of Fiserv Health means to his company. The idea of being able to leverage United's many assets excites Campbell." (Employee Benefit Advisor; free registration required)

New Push for Greater E-Prescribing Accelerates at the Federal Level
Excerpt: "The effort to increase electronic prescribing is gaining momentum on Capitol Hill, as bipartisan groups of lawmakers push legislation that would require doctors to use e-prescribing under Medicare Part D, and request changes to federal regulations that prohibit the e-prescribing of controlled substances. Legislation introduced Dec. 5 provides new incentives and sanctions to encourage e-prescribing." (AISHealth.com)

Smokers Cost Money, So Some Companies Offer Incentives While Charging Higher Premiums to Those Who Still Light Up
Excerpt: "Employers' first line of action is supportive, urging employees to quit smoking by giving them resources to help. They're offering free how-to classes on company time, and expanding their coverage of nicotine replacements, prescription drugs, laser therapy and other smoking cessation treatments." (St. Petersburg Times)

(e) Policy, Opinion, Advocacy

Opinion: What Are the Most Serious Challenges Facing American Health Care Today?
Responses by Dr. Thomas R. Reardon, American Medical Association, and, Karen Ignagni, The American Association of Health Plans. (CNN.com)

Bending the Curve: Options for Achieving Savings and Improving Value in U.S. Health Spending
Excerpt: "In this report prepared for The Commonwealth Fund Commission on a High Performance Health System, the authors examine 15 federal policy options that have the potential to lower health spending relative to projected trends. They include policies that would: produce and use better information for health care decision-making, promote health and enhance disease prevention, align financial incentives with quality and efficiency, and correct price signals in health care markets. Combining policies would capture the synergistic benefits of individual changes. If implemented along with universal health insurance, a combination of selected options could save $1.5 trillion in national health expenditures over 10 years, while also improving value in terms of access, quality, and health care outcomes." (The Commonwealth Fund)

Zagat Rated Physicians: An Odd, Flawed System
Excerpt: "Starting in January 2008, select participants of Wellpoint's Blue Cross/Blue Shield plans will launch an online survey tool which will enable participants to rate their physician experiences by utilizing Zagat's 30-point scale. While the survey will not tackle the two most important factors in a health-care encounter – quality and cost – it will let their patients rate physicians on elements of trust, communication, availability, and environment." (The PRECEPT Employee Benefits Blog)


Links to Items on Executive Comp, Benefits in General

Conference Board Unveils Mature Workforce Employer Practices Database
Excerpt: "The Conference Board has launched an Employer-Practices Locator, a Web-based database that includes specific actions employers have taken to address challenges presented by the mature workforce." (PLANSPONSOR.com; free registration required)

Acquiring Technology for Benefits Administration (PDF)
6 pages. Excerpt: "The acquisition of benefits administration software for Taft-Hartley funds can appear far more intimidating, expensive and risk filled than it needs to be. With a little planning and a focus on developing a detailed design for the new system prior to implementation, funds can identify solutions that are often more efficient, more cost-effective and much less painful." (International Foundation of Employee Benefit Plans via Milliman)

Section 409A Operational Error Relief: Summary and Comments (PDF)
11 pages. Excerpt: "Generally, the Notice provides penalty-free corrections for certain errors that are corrected in the same calendar year in which they occurred. During a transitional period, there are mitigated penalties for certain errors involving small amounts that are corrected in a subsequent calendar year. The Notice also includes an outline of a potential correction program." (Hewitt Associates)

New IRS Rules Restrict Corporate Abuses on Deferred Compensation
Excerpt: "The increase in corporate scandals at companies such as Enron prompted formation of the American Jobs Creation Act, added to the Internal Revenue Code in 2004. The new law created Section 409A, meant to control compensation abuses by high-level corporate executives and thereby quell future scandals. The Internal Revenue Service also has created a tandem audit initiative focusing on executive compensation practices. The enactment focused on taming abuses by substantially changing the tax treatment of 'nonqualified deferred compensation plans,' which often are designed for upper-level management." (The Kansas City Star)

Executive Compensation Consultant Explains Why the Advising Process Is Being Criticized
Excerpt: "The issue of compensation for chief executives was muted in 2007 but the issue will heat up again in 2008, says George Paulin, CEO of Frederick W. Cook & Co., a leading compensation consultancy that works for 54 of the largest 250 companies in the U.S. One issue that will be hot is whether compensation consultants, whose advice is critical in helping boards make decisions, have inherent conflicts of interest, a subject that Paulin testified on before the House Committee on Oversight & Government Reform in early December. Here are edited excerpts from a recent conversation we had . . . ." (BusinessWeek)

IRS Expected to Issue a New, Significantly Revised Form 990 Soon
Excerpt: " An IRS spokesman acknowledged that the tax agency will make a major announcement about Form 990 the week of Dec. 17, and industry sources say the announcement is expected to be the unveiling of the much-anticipated new form, which requires nonprofits to report, among other things, executive compensation, charity care and information on joint ventures and management companies (which makes it much easier for enforcers to determine, among other things, whether hospitals are charging for costs only from related parties on their cost reports)." (AISHealth.com)


Newly Posted Events

Code Section 409A’s Effect on Employee Benefits and Executive Compensation
in Oregon on January 22, 2008
presented by Durig Capital, LLC

Pension & Benefits Conference - Orange County
in California on January 30, 2008
presented by The Waage Law Firm, APC

Pension & Benefits Conference - San Diego County
in California on January 23, 2008
presented by The Waage Law Firm, APC


Newly Posted Press Releases

Former Ligonier Company Owner Admits Embezzling From Profit Sharing Plan
U.S. Department of Labor, Employee Benefits Security Administration (EBSA)

U.S. Labor Department Proposes Civil Penalty Rules Under The Pension Protection Act
U.S. Department of Labor, Employee Benefits Security Administration (EBSA)

New Book Provides Fiduciaries with Guidance When Choosing Professional Advisors
International Foundation of Employee Benefit Plans

Perritt Funds Added to CPI Retirement Platform
CPI Qualified Plan Consultants, Inc.


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